THE MODERN company has morphed into a “money monster” enslaved to the doctrine of shareholder value. That is the thesis of a new book* by Colin Mayer, a professor at the Saïd Business School in Oxford. It is the latest challenge to the principle enunciated by Milton Friedman, an economist: namely, that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” An influential paper** by Oliver Hart and Luigi Zingales last year argued that profitability is not the only criterion that should apply and that shareholders’ welfare is affected by a broad range of factors, including social and environmental conditions.

Mr Mayer takes a similar line, arguing that companies have relationships with many more people than just shareholders. As well as financial capital, they use several other types—human,...